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MG Kelley company is considering using available space to make 10,000 units of a component part $41.50 per unit. The company's accounting system estimates the
MG Kelley company is considering using available space to make 10,000 units of a component part $41.50 per unit. The company's accounting system estimates the following costs of making the part: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable. Fixed manufacturing overhead, allocated Total cost Per 10,000 Units Unit per Year $ 16 $ 160,000 12 120,000 2 20,000 8 80.000 4 0,900 $ 44 $ 420 One-half of the traceable fixed manufacturing overhead relates to a supervisor that would have to be hired to oversee produc remainder of the traceable fixed manufacturing overhead relates to depreciation of equipment that the company already own resale value. The allocated fixed manufacturing overhead relates to general overhead costs, such as the plant manager's sale cooling costs, and plant insurance costs. What is the financial advantage (disadvantage) of making 10,000 units instead of supplier? Multiple Choice
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